NCLAT seeks RoC explanation on Tata Sons going 'private'

New Delhi, January 2 (IANS): The National Company Law Appellate Tribunal (NCALT) on Thursday asked the Registrar of Companies (RoC) to explain the rationale behind allowing Tata Sons to convert into a private company.

 

A two-member bench headed by NCLAT Chairman Justice S.J. Mukhopadhaya also sought an explanation on the due process for allowing the conversion from public to a private company. It would next hear the matter on Friday, December 3.

 

The appellate tribunal sought details on the paid-up capital requirement.

 

The RoC under the Corporate Affairs Ministry had on December 23 moved the NCLAT seeking modification in its order in the Tata Sons matter where it wants removal of the word "illegal" with respect to conversion of Tata Sons from a public company to private company which was done after the government body's approval.

 

After Cyrus Mistry was sacked, Tata Sons had received its shareholders' nod in September 2017 to convert itself into a private limited company from a public limited company, where there would be no need to take shareholders' consent in taking crucial decisions, which could be passed with the board's approval.

 

Tata Sons Ltd was initially a 'private company' but after insertion of Section 43A (1A) in the Companies Act, 1956 on the basis of average annual turnover, it assumed the character of a deemed 'Public Company' with effect from February 1, 1975, the order said.

 

In another development on Thursday, Tata Sons moved the Supreme Court against re-appointment of Mistry as the company's Chairman.

 

The firm has challenged the complete order of the NCLAT judgement, and sought a stay on it in the wake of TCS board meeting scheduled to be held on January 9.

 

Tata Sons moves SC against

NCLAT order on Cyrus Mistry

Tata Sons Thursday moved the Supreme Court challenging reinstatement of Cyrus Mistry as executive Chairman and director of Tata Sons and the three group companies -- Tata Consultancy Services Ltd (TCS), Tata Industries Ltd and Tata Teleservices (Maharashtra) Ltd.

 

The company has challenged the complete order of the National Company Law Appellate Tribunal (NCLAT), pronounced on December 18, restoring Mistry as executive Chairman and also his immediate reinstatement as director of Tata Sons and three group companies.

 

The petition seeks a stay on the NCLAT order in the wake of the TCS Board Meeting slated for January 9.

 

It is learnt that the board meeting is likely to consider the third quarter earnings and a discussion on the reinstatement of Mistry as a director. The petitioner will urge the apex court to list the matter for urgent hearing after the court reopens after vacations on January 6.

 

The NCLAT while reinstating ousted chairman Cyrus Mistry, held that the appointment of N. Chandrasekaran as his successor is illegal. The appeals court observed the haste in Mistry's removal as chairman of the Tata group's holding company, and this action completely ignored the interest and oppression of minority shareholders.

 

However, the appellate tribunal has granted the Tata Group four weeks to file an appeal against its judgement. The restoration order will only be operational after this time period.

 

Aryama Sundaram, counsel for Mistry, had told IANS: "NCLT appeared to have gone with the Tata name and the majoritarian view in its earlier judgment. This goes against the grain of Company Law and Companies Act. If one follows the earlier path, then you don't need provisions in law which safeguards minority shareholders' rights.

 

"This was an erroneous approach. What we did as counsel was that we contested this template. It wasn't the individual right of Mr Mistry, which was being trampled, it was the oppression and mismanagement of the board that was in question and this directly impacted varied shareholders including millions of public shareholders."